FSA increases guaranteed loan limit

Mon, 2011-10-10 15:04

The loan limit for the Guaranteed Loan Program will increase to $1,214,000.

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USDA Farm Service Agency (FSA) California State Executive Director SED Val Dolcini announced that the loan limit for the Guaranteed Loan Program will increase to $1,214,000. The limit is adjusted annually based on the "Prices Paid to Farmers Index," compiled by the National Agricultural Statistics Service (NASS).

“Raising the guaranteed loan limit will allow FSA to better meet the financial needs of eligible California farmers and ranchers” said Dolcini. "Farming and ranching are capital-intensive business activities," he said. “Costs for inputs, fuel and equipment are climbing every year.”

Another change to the guaranteed loan program will affect the one-time loan guarantee fee charged on all FSA loans obligated after October 1, 2011. The one-time loan guarantee fee will increase from 1.0 percent to 1.5 percent of the guaranteed portion of the loan.

During Fiscal Year 2011, the capital FSA extended to California farmers and ranchers grew by 1.9 percent to $119,474,270. That represents 675 direct and guaranteed loans made by FSA staff to Golden State producers. Notably, 59.7 percent of those California loans were made to socially disadvantaged and / or beginning farmers and ranchers, two important target markets for FSA financing.

Guaranteed Loans by FSA allow other lenders to provide agricultural credit to farmers who do not meet the lender's normal underwriting criteria. Farmers and ranchers apply for a guaranteed loan through a commercial lender, and the lender arranges for the guarantee. FSA can guarantee up to 95 percent of the loss of principal and interest on a loan. Guaranteed loans can be used for both farm ownership and operating purposes.

Producers who are unable to obtain financing through a commercial lender or through a guaranteed loan, could be eligible for an FSA Direct Loan. These Direct Loans have a limit of $300,000 with the exception of Emergency Loans with a ceiling of $500,000. The maximum allowable combined guaranteed and direct indebtedness is now $1,514,000.

For more information on FSA’s farm loan programs, please contact an FSA Farm Loan staff member near you by calling a local FSA Office or by calling 530-792-5520.